Solar Energy Incentives*
Valuable Federal and State incentives*, each worth thousands of dollars, help homeowners offset and recover the cost of having solar installed on their homes. One of the best things about the incentives is that they can be fully utilized regardless of whether the system is owned or leased. When you purchase your solar system, these incentives go directly to you, helping make the investment a great one. When you lease your solar system, the incentives go to the lease company, allowing the lease company to provide you with low monthly payments that save you money immediately.
New Jersey Solar Renewable Energy Credit (SREC)
New Jersey has its own Solar Renewable Energy Credit (SREC) program which incentivizes New Jersey homeowners and businesses to switch to solar energy. For every megawatt (1,000 kWh’s) of solar energy produced by a system, the SREC program creates solar certificates on your behalf. These certificates are purchased by electric suppliers to meet New Jersey state regulations for utility companies operating here, and the proceeds are paid to the system owners. The current SREC program has a duration of 15 years, and the value of a SREC for a residential system is rising, so each year a typical Ad Energy solar installation will generate hundreds, even thousands of dollars a year. The bottom line is that in addition to generating your own cheaper clean energy, you can actually get paid from the local utilities for producing solar electricity.
Federal Investment Tax Credit – 30%
The federal government through the Residential Energy Credit program (IRS Form 5695), provides a 30% tax credit for residential solar energy systems that go into operation during the calendar year 2032. This is a “dollar for dollar” tax credit worth 30% of the solar energy system’s cost that eligible homeowners can recover through their tax filings and can often be worth $10,000 or more. The credit is often applied against the cost of a system’s financing and helps to accelerate the break-even time frame, at which point the electricity a system generates is effectively “free”!
Keep In Mind: The home served by the system does not have to be the taxpayer’s principal residence. This is great news for real estate investors and/or for individuals with more than one residence. On leased systems, SunPower® collects this incentive and passes the savings on to the homeowner! Hurry and take advantage of this while it lasts, as this credit is scheduled to completely phase out by 2034.
Property & Sales Tax Exemption
New Jersey Solar Energy Sales Tax Exemption
When you purchase your home solar system, you will be 100 percent exempt from any New Jersey sales tax, due to the PV energy sales tax exemption. That means you’ll spend 7 percent less on your solar equipment. This exemption is available to all New Jersey taxpayers.
New Jersey Property Tax Exemption for Renewable Energy Systems
Even though the value of your property increases because of your solar energy system, New Jersey has exempted this improvement from impacting your assessment on your local property taxes – making solar a rare home improvement that does not increase your taxes!
There will be times when the sun is out and you use the electricity from your solar system directly. There will be times when the sun is out but you aren’t at home using that electricity. At those times, the electricity is automatically provided to the utility grid. Through net metering, the utility provides you credit on your bill at retail prices for that electricity you provided to the grid.
*Ask your representative about which incentive you’re eligible to receive. Please consult a tax advisor on your ability to claim these nonrefundable tax credits.